MORGAN STANLEY B.V. as issuer (incorporated with limited liability in The Netherlands)

Transcription

1 MORGAN STANLEY B.V. as issuer (incorporated with limited liability in The Netherlands) as guarantor (incorporated under the laws of the State of Delaware in the United States of America) Issue by Morgan Stanley B.V. of up to SEK 200,000,000 Equity Linked Notes due January 2019 linked to the Morgan Stanley SmartInvest Equity Index (Price Return) (the "Program Securities" or the "Notes") Regulation S Program for the Issuance of Notes, Series A and B, Warrants and Certificates This Prospectus This document constitutes a prospectus (the "Prospectus") for the purposes of Article 3 of Directive 2003/71/EC as amended by Directive 2010/73/EU (the "Prospectus Directive") relating to the Program Securities to be issued by Morgan Stanley B.V. (the "Issuer" or "MSBV") and guaranteed by Morgan Stanley (the "Guarantor" or "Morgan Stanley"). This Prospectus has been approved by the Central Bank of Ireland ("Central Bank"), as competent authority under the Prospectus Directive. The Central Bank only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Listing Application has been or will be made for the Program Securities to be admitted to the Official List (the "Official List") and trading on the regulated market of the Irish Stock Exchange with effect from the issue date of the Program Securities (being 10 January 2014). Application has been or will be made for the Program Securities to be admitted to the Official List (the "Official List") and trading on the regulated market of the Nordic Derivatives Exchange (NDX) with effect from the issue date of the Program Securities (being 10 January 2014). Such approval relates only to the Program Securities which are to be admitted to trading on a regulated market for the purposes of Directive 2004/39/EC and/or which are to be offered to the public in any Member State of the European Economic Area. The Program The Program Securities are being issued under the Regulation S Program for the Issuance of Notes, Series A and B, Warrants and Certificates (the "Program") of the Issuer (and two other issuers, including the Guarantor) and the Guarantor. The Program was established on 27 June Status of the Program Securities The Program Securities are unsecured and unsubordinated general obligations of the Issuer and not of any affiliate of the Issuer. The Program Securities are not bank deposits and are not insured by the United States Federal Deposit Insurance Corporation or any other governmental agency in any jurisdiction, nor are they obligations of, or guaranteed by, a bank. The Guarantee The payment of all amounts due in respect of the Program Securities issued by the Issuer are unconditionally and irrevocably guaranteed by the Guarantor pursuant to a guarantee dated as of 27 June 2013 (the "Guarantee"). Information incorporated by reference This Prospectus incorporates by reference the Registration Document dated 5 June 2013 (the "Registration Document") and certain other filings in relation to the Issuer and Guarantor. The Registration Document has been filed with the Central Bank for the purposes of Article 11.1 of the Prospectus Directive. See "Documents Incorporated by Reference" beginning at page 25 below. You should read this Prospectus together with such information from the Registration Document and such filings.

2 Terms and conditions of the Program Securities The terms and conditions of the Program Securities shall comprise the (i) "Terms and Conditions of the Notes" (beginning at page 32 below), as completed and amended by (ii) the "Contractual Terms" set out in this Prospectus beginning at page 68 below. Risk warning The Program Securities are not principal protected. There is a risk that you could lose some or up to all of your investment. Before purchasing Program Securities, you should consider, in particular, "Risk Factors" beginning at page 14 below. The date of this Prospectus is 31 October 2013 ii

3 Important Notices IMPORTANT NOTICES The Program Securities may not be a suitable investment for all investors An investment in the Program Securities entails certain risks. Each potential investor should determine whether an investment in the Program Securities is appropriate in its particular circumstances. An investment in the Program Securities requires a thorough understanding of the nature of the relevant transaction. Potential investors should be experienced with respect to an investment in the Program Securities and be aware of the related risks. An investment in the Program Securities is only suitable for potential investors who: have the requisite knowledge and experience in financial and business matters to evaluate the merits and risks of an investment in the Program Securities and the information contained or incorporated by reference into this document; have access to, and knowledge of, appropriate analytical tools to evaluate such merits and risks in the context of the potential investor's particular financial situation and to evaluate the impact the Program Securities will have on their overall investment portfolio; understand thoroughly the terms of the Program Securities and are familiar with the behaviour of the Relevant Underlying and financial markets; are capable of bearing the economic risk of an investment in the Program Securities until the maturity date of the Program Securities; recognise that it may not be possible to dispose of the Program Securities for a substantial period of time, if at all before the maturity date; and are familiar with the behaviour of the Relevant Underlying and relevant financial markets and be able to evaluate (either alone or with the help of a financial and legal adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. The Program Securities are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Program Securities unless it has the expertise (either alone or with a financial and legal adviser) to evaluate how the Program Securities will perform under changing conditions, the resulting effects on the value of the Program Securities and the impact this investment will have on the potential investor's overall investment portfolio. The Issuer, the Guarantor and MSI plc as Dealer disclaim any responsibility to advise prospective investors of any matters arising under the law of the country in which they reside that may affect the purchase of, or holding of, or the receipt of payments or deliveries on the Program Securities. Investing in the Program Securities involves risks. See the section entitled "Risk Factors" below and the section entitled "Description of the Morgan Stanley SmartInvest Equity Index (Price Return) 6. Final Provisions and Risk Factors" below. Responsibility statement and consent to use this Prospectus Morgan Stanley accepts responsibility for the information relating to itself and to its guarantee of the obligations of MSBV. MSBV accepts responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of each of Morgan Stanley and MSBV (each of which has taken all reasonable care to ensure that such is the case), the information for which it accepts responsibility as aforesaid is in accordance with the facts and does not omit anything likely to affect the import of such information. iii

4 Important Notices Subject to the conditions set out below, in connection with a Non-exempt Offer (as defined below) of the Program Securities, the Issuer and the Guarantor consent to the use of this Prospectus by OAK Capital AB (the "Authorised Offeror" or "Distribution Agent"). The consent of the Issuer and the Guarantor is subject to the following conditions: (i) (ii) the consent is only valid during the period from, and including, 4 November 2013 to, and including, 29 November 2013 (the "Offer Period"); and the consent only extends to the use of this Prospectus to make Non-exempt Offers (as defined below) of the Program Securities in Sweden. A "Non-exempt Offer" of the Program Securities is an offer of the Program Securities that is not within an exemption from the requirement to publish a prospectus under the Prospectus Directive. The Issuer may (i) give consent to one or more additional Authorised Offerors after the date of this Prospectus, (ii) discontinue or change the Offer Period, and/or (iii) remove or add conditions and, if it does so, such information in relation to the Program Securities will be published by way of notice which will be available on provided that, prior to the listing of the Program Securities on the regulated market of the Irish Stock Exchange and/or the Nordic Derivatives Exchange (NDX), any such information will be the subject of a supplement to this Prospectus under Article 16 of the Prospectus Directive. The Issuer accepts responsibility for the content of this Prospectus in relation to any person purchasing the Program Securities pursuant to a Non-exempt Offer where the offer to the Investor (as defined in the paragraph below) is made (i) by an Authorised Offeror (or the Issuer, the Guarantor, Dealer or Distribution Agent named herein), (ii) in a Member State for which the Issuer has given its consent, (iii) during the Offer Period for which the consent is given and (iv) in compliance with the other conditions attached to the giving of the consent, all as set forth in this Prospectus or as subsequently published in accordance with the paragraph immediately above. However, none of the Issuer, the Guarantor and the Dealer has any responsibility for any of the actions of any Authorised Offeror, including compliance by an Authorised Offeror with applicable conduct of business rules or other local regulatory requirements or other securities law requirements in relation to such offer. Any person (an "Investor") intending to acquire or acquiring any Program Securities from an Authorised Offeror will do so, and offers and sales of Program Securities to an Investor by the relevant Authorised Offeror will be made, in accordance with any terms and other arrangements in place between such Authorised Offeror and such Investor including as to price, allocations and settlement arrangements. The Issuer will not be a party to any such arrangements with Investors in connection with the offer or sale of the Program Securities and, accordingly, this Prospectus will not contain such information and an Investor must obtain such information from the relevant Authorised Offeror. Information in relation to an offer to the public will be made available at the time such sub-offer is made, and such information will also be provided by the relevant Authorised Offeror at the time of such offer. Other important notices THE PROGRAM SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES, AND ARE SUBJECT TO U.S. TAX LAW REQUIREMENTS. THE PROGRAM SECURITIES MAY NOT BE OFFERED, SOLD OR DELIVERED AT ANY TIME, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT). SEE "SUBSCRIPTION AND SALE" AND "NO OWNERSHIP BY U.S. PERSONS" below. Each investor must comply with all applicable laws and regulations in each country or jurisdiction in or from which the investor purchases, offers, sells or delivers the Program Securities or has in the investor's possession or distributes this Prospectus or any accompanying Contractual Terms. iv

5 Important Notices THE PROGRAM SECURITIES ARE NOT BANK DEPOSITS AND ARE NOT INSURED BY THE U.S. FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY, NOR ARE THEY OBLIGATIONS OF, OR GUARANTEED BY, A BANK. No person has been authorised by either of Morgan Stanley or MSBV to give any information or to make any representation not contained or incorporated by reference in this Prospectus, and, if given or made, that information or representation should not be relied upon as having been authorised by Morgan Stanley or MSBV. Neither the delivery of this Prospectus nor the offering, sale or delivery of any Program Securities will, in any circumstances, create any implication that the information contained in this Prospectus is true subsequent to the date hereof or the date upon which this Prospectus has been most recently amended or supplemented or that there has been no adverse change in the financial situation of any of Morgan Stanley or MSBV since the date hereof or, as the case may be, the date upon which this Prospectus has been most recently amended or supplemented or the balance sheet date of the most recent financial statements which have been incorporated into this Prospectus by way of a supplement to this Prospectus, or that any other information supplied from time to time is correct at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. Investors should review, inter alia, the most recent financial statements of Morgan Stanley and MSBV when evaluating any Program Securities or an investment therein (such financial statements shall not form a part of this Prospectus unless they have been expressly incorporated herein, including by way of a supplement to this Prospectus). The distribution of this Prospectus and the offering, sale and delivery of the Program Securities in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are required by Morgan Stanley and MSBV to inform themselves about and to observe those restrictions. The Issuer does not intend to provide post-issuance information in respect of the Program Securities. This Prospectus should be read and construed with any amendment or supplement thereto and with any other documents incorporated by reference therein. Each recipient of this Prospectus will be taken to have made its own investigation and appraisal of the condition (financial or otherwise) of Morgan Stanley and MSBV and of the terms of the Program Securities. This Prospectus may not be used for the purpose of an offer or solicitation by anyone in any jurisdiction in which that offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. The Program Securities do not qualify as units of a collective investment scheme according to the relevant provisions of the Swiss Federal Act on Collective Investments Scheme ("CISA"), as amended, and are not registered thereunder. Therefore, the Program Securities are neither governed by the CISA or supervised by the Swiss Financial Market Supervisory Authority ("FINMA"). Accordingly, investors do not have the benefit of the specific investor protection provided under the CISA. All references in this Prospectus to "euro", " " and "EUR" are to the lawful single currency of the member states of the European Union who have adopted and continue to retain a common single currency through monetary union in accordance with European Union treaty law (as amended from time to time), all references to "U.S. dollars", "U.S.$", "USD" and "$" are to the lawful currency of the United States of America and all reference to "SEK" and "Swedish Krona" are to the lawful currency of Sweden. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE GUARANTOR AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY UNITED STATES FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR v

6 Important Notices DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE. IN CONNECTION WITH THE ISSUE OF THE NOTES, THE DISTRIBUTION AGENT OR ANY OTHER AGENT SPECIFIED FOR THAT PURPOSE IN THE APPLICABLE FINAL TERMS AS THE STABILISING MANAGER (OR ANY PERSON ACTING FOR THE STABILISING MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED PERIOD. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER (OR ANY AGENT OF THE STABILISING MANAGER) WILL UNDERTAKE STABILISING ACTION. ANY STABILISING ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE PROGRAM SECURITIES IS MADE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME, BUT MUST BE BROUGHT TO AN END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE PROGRAM SECURITIES. ANY STABILISING ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER (OR ANY PERSON ACTING FOR THE STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES. vi

7 TABLE OF CONTENTS SUMMARY... 1 RISK FACTORS WHERE THE INVESTOR CAN FIND MORE INFORMATION ABOUT MORGAN STANLEY DOCUMENTS INCORPORATED BY REFERENCE SELECTED FINANCIAL INFORMATION OF MORGAN STANLEY AND MSBV TERMS AND CONDITIONS OF THE PROGRAM SECURITIES TERMS AND CONDITIONS OF THE NOTES CONTRACTUAL TERMS OTHER INFORMATION ANNEX TO THE CONTRACTUAL TERMS FORM OF NOTES DESCRIPTION OF THE MORGAN STANLEY SMARTINVEST EQUITY INDEX (PRICE RETURN) BENEFIT PLAN INVESTORS UNITED STATES FEDERAL TAXATION NETHERLANDS TAXATION IRISH TAXATION SWEDISH TAXATION PROPOSED FINANCIAL TRANSACTION TAX EUROPEAN UNION SAVINGS DIRECTIVE SUBSCRIPTION AND SALE NO OWNERSHIP BY U.S. PERSONS FORM OF GUARANTEE GENERAL INFORMATION INDEX OF DEFINED TERMS Page vii

8 Summary SUMMARY Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "Not Applicable". Section A Introduction and Warnings A.1 Introduction: This summary should be read as introduction to the Prospectus. Any decision to invest in the Notes should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Consent: The Issuer and the Guarantor consent to the use of the Prospectus by OAK Capital AB (as an authorised offeror or distribution agent), subject to the following conditions: the consent is only valid during the Offer Period (defined in E.3 below); and the consent only extends to the use of the Prospectus to make an offer of the Notes in Sweden that is not within an exemption from the requirement to publish a prospectus under the Prospectus Directive. The Issuer may give consent to one or more additional authorised offerors after the date of the Prospectus; discontinue or change the offer period stated above, or remove or add conditions. If it does so, such information in relation to the Notes will be published by way of notice which will be available on provided that, prior to the listing of the Notes on the regulated market of the Irish Stock Exchange and/or the Nordic Derivatives Exchange (NDX), any such information will be the subject of a supplement to the Prospectus under Article 16 of the Prospectus Directive. An investor intending to acquire or acquiring the Notes from an Authorised Offeror will do so, and offers and sales of the Notes to an Investor by an Authorised Offeror will be made, in accordance with any terms and other arrangements in place between such Authorised Offeror and such Investor including as to price, allocation, settlement arrangements and any expenses or taxes to be charged to the investor (the "Terms and Conditions of the Non-exempt Offer"). Neither the Issuer nor the Guarantor will be a party to any such arrangements with Investors (other than the Distribution Agent) in connection with the offer or sale of the Notes and, accordingly, this Prospectus and any 1

9 Summary Contractual Terms will not contain such information. The Terms and Conditions of the Non-exempt Offer shall be published by that Authorised Offeror on its website at the relevant time. None of the Issuer, the Guarantor, the Dealer or other Authorised Offeror has any responsibility or liability for such information. Section B Issuer and Guarantor B.1 Legal name and commercial name of the Issuer and the Guarantor: B.2 Domicile and legal form of the Issuer and the Guarantor, the legislation under which each of the Issuer and the Guarantor operates and the respective country of incorporation: Guarantor: Morgan Stanley ("Morgan Stanley") Issuer: Morgan Stanley B.V. ("MSBV") Morgan Stanley is incorporated and operates under the General Corporation Law of the State of Delaware. As a financial holding company, it is regulated by the Board of Governors of the Federal Reserve System (the "Federal Reserve") under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). MSBV was incorporated as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) under the laws of The Netherlands on 6 September 2001 for an unlimited duration. MSBV is registered at the commercial register of the Chamber of Commerce and Industries (Kamer van Koophandel) for Amsterdam. It has its corporate seat in Amsterdam, The Netherlands. MSBV is incorporated under, and subject to, the laws of The Netherlands. B.4b Trends: The business of Morgan Stanley, the ultimate holding company of MSBV, may be affected by factors such as economic and political conditions and geopolitical events; market conditions (particularly in the global equity, fixed income, credit and commodities markets), current, pending and future legislation, regulation and legal actions in the United States of America and worldwide, equity, fixed income, and commodity prices and interest rates, currency values and other market indices, the availability and cost of credit and capital, investor, consumer and business sentiment and confidence in the financial markets; inflation, natural disasters and acts of war or terrorism; the actions and initiatives of competitors as well as governments, regulators and self-regulatory organizations, including changes in the way financial institutions are regulated; and technological changes. B.5 The group and the Issuer's position within the group: Morgan Stanley is the ultimate parent undertaking of the group comprising Morgan Stanley and its consolidated subsidiaries (the "Morgan Stanley Group"). MSBV has no subsidiaries. It is ultimately controlled by Morgan Stanley. B.9 Profit Forecast: Not Applicable. forecasts. Morgan Stanley and MSBV do not provide profit B.10 Audit Report Qualifications: Not Applicable. There are no qualifications in the auditor's reports on the financial statements of Morgan Stanley and MSBV for the years ended 31 December 2011 and 31 December

10 Summary B.12 Selected Historical Key Financial Information: Selected key financial information relating to Morgan Stanley: Consolidated Balance Sheet (dollars in millions) At 31 Dec 2011 At 30 June (unaudited) At 31 Dec Total Assets , , , ,691 Total liabilities, redeemable 749, , , ,691 noncontrolling interests and equity... Six months ended 30 June 2013 (unaudited) Consolidated Income Statement (dollars in millions) 31 Dec Dec Net Revenues... 32,236 26,112 13,866 16,661 Income from continuing operations 6, before income tax... 1,139 3,357 Net income... 4, ,422 There has been no material adverse change in the prospects of Morgan Stanley since 31 December 2012, the date of the latest published annual audited accounts of Morgan Stanley, nor any significant change in the financial or trading position of Morgan Stanley since 30 June Selected key financial information relating to MSBV: As at 30 June (unaudited) Statement of financial position (in Euro '000) 31 Dec 31 Dec Total assets... 4,187,365 6,519,685 7,007,785 9,598,730 Total liabilities and equity... 4,187,365 6,519,685 7,007,785 9,598,730 Statement of comprehensive income (in Euro '000) 31 Dec 2011 Six months ended 30 June (unaudited) 31 Dec Net gains/(losses) on financial instruments classified as held for trading... (538,848) (81,202) (325,085) 17,643 Net gains/(losses) on financial instruments designated at fair value through profit or loss ,848 81, ,085 (17,643) Profit before income tax... 4,020 4,875 2,257 3,005 Profit and total comprehensive income for the year/period... 3,026 3,679 1,693 2,254 There has been no material adverse change in the prospects of MSBV since 31 December 2012, the date of the latest published annual audited accounts of MSBV, nor any significant change in the financial or trading position of MSBV since 30 June 2013, the date of the latest published interim financial statements of MSBV. B.13 Recent Events materially relevant to evaluation of solvency: B.14 Dependence upon other entities within Not Applicable. Each of Morgan Stanley and MSBV considers that no event particular to itself and which is to a material extent relevant to the evaluation of their respective solvency has taken place since the publication of their last respective annual financial statements. See Element B.5 for the group and the Issuer's position within the group. Morgan Stanley is a holding company and depends on payments from its 3

11 Summary the group: subsidiaries to fund dividend payments and to fund all payments on its obligations, including debt obligations. MSBV is ultimately controlled by Morgan Stanley. B.15 The Issuer's and Guarantor's Principal Activities: Morgan Stanley, a financial holding company, is a global financial services firm that, through its subsidiaries and affiliates, provides its products and services to a large and diversified group of clients and customers, including corporations, governments, financial institutions and individuals. It maintains significant market positions in each of its business segments Institutional Securities, Wealth Management and Investment Management. MSBV's principal activity is the issuance of financial instruments and the hedging of obligations arising pursuant to such issuances. B.16 Controlling Persons: The following entities beneficially own more than 5 per cent of Morgan Stanley's common stock: Mitsubishi UFJ Financial Group, Inc. (22.2% holding); State Street Bank and Trust Company (9.1% holding) and China Investment Corporation (6.4% holding). MSBV is ultimately controlled by Morgan Stanley. B.18 Nature and scope of the Guarantee: The payment of all amounts due in respect of Notes issued by MSBV are unconditionally and irrevocably guaranteed by Morgan Stanley pursuant to a guarantee dated as of 27 June 2013 and governed by New York law. Status of the Guarantee: The Guarantor's obligations under the Guarantee constitute direct and general obligations of the Guarantor which rank pari passu among themselves. B.19 Information about the Guarantor: See Elements in Section B in relation to the Guarantor, Morgan Stanley. C.1 Type and class of the Notes and ISIN number: Section C - The Notes Title of Notes: Up to SEK 200,000,000 Equity Linked Notes due January 2019 linked to the Morgan Stanley SmartInvest Equity Index (Price Return). ISIN Code: SE C.2 Currencies: Swedish Krona ("SEK"). C.5 Free transferability: The Notes will only be issued in circumstances which comply with the laws, guidelines, regulations, restrictions or reporting requirements which apply to the Notes from time to time including the restrictions on the offer and sale of Notes and the distribution of offering materials in various jurisdictions applicable at the date of the Prospectus. The Issuer and the Distribution Agent have agreed certain restrictions on the offer, sale and delivery of the Notes and on the distribution of offering material in the United States, the EEA and, in particular, Sweden. However, the Notes may be freely transferred in the relevant clearing system(s). The Notes cannot be offered, sold or delivered in the United States or to US persons at any time. C.8 The Rights attached to the Notes, Ranking Rights: The Notes give the right to each Noteholder to receive a potential return on 4

12 Summary and Limitations to those Rights: the Notes (see Element C.18 below). governed under English law. Ranking: The terms and conditions are The Notes are unsecured and unsubordinated general obligations of the Issuer and not of any affiliate of the Issuer. The Notes constitute direct and general obligations of the Issuer which rank pari passu among themselves. The Notes are not bank deposits and are not insured by the United States Federal Deposit Insurance Corporation or any other governmental agency in any jurisdiction, nor are they obligations of, or guaranteed by, a bank. Limitations to the rights: Notwithstanding that the Notes are linked to the performance of an index, Noteholders do not have any rights in respect of the index or the securities which comprise such index. The terms and conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally and these provisions permit defined majorities to bind all Noteholders, including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. Further, in certain circumstances, the Issuer may amend the terms and conditions of the Notes, without the Noteholders' consent. The terms and conditions of the Notes permit the Issuer, on the occurrence of certain events and in certain circumstances, without the Noteholders' consent, to make adjustments to the terms and conditions of the Notes, to redeem the Notes prior to maturity, (where applicable) to postpone valuation of the underlying assets or scheduled payments under the Notes, to substitute the Issuer with another permitted entity subject to certain conditions, and to take certain other actions with regard to the Notes and the underlying assets (if any). Claims for principal on redemption in respect of the Notes shall become void unless made within ten years of the due date for payment. C.11 Listing and Admission to Trading: Application has been or will be made by the Issuer (or on its behalf) for the Notes to be admitted to the Official List and to trading on the regulated market of the Irish Stock Exchange. Application has been or will be made by the Issuer (or on its behalf) for the Notes to be admitted to the Official List and to trading on the regulated market of the Nordic Derivatives Exchange (NDX). C.15 How the value of the investment is affected by the Relevant Underlying: The market price or value of the Notes at any time is expected to be affected by changes in the value of the Relevant Underlying to which the Notes are linked. The redemption amount payable on the Notes at maturity is dependent on the closing level of the Relevant Underlying on the determination date (17 December 2018, subject to adjustment): (i) (ii) If the closing level on the determination date is below the closing level on the strike date (being 17 December 2013) and below the barrier level (being equal to 70 per cent. of the closing level on strike date), then the redemption amount payable will be less than par and could be as low as zero. In this case, you will lose some and up to all of your money. If the closing level on the determination date is below the closing 5

13 Summary level on strike date but above or equal to the barrier level, then the redemption amount will be equal to par, and (assuming the Notes were purchased at a net purchase price of par) you will receive no return on the Notes. (iii) If the closing level on the determination date is equal to or above the closing level on the strike date, then the redemption amount payable and therefore the return on the Notes will depend on the performance of the Relevant Underlying over nine averaging dates as well as any change in EUR/SEK and EUR/USD foreign exchange rates between the first business day prior to the strike date and the first business day following the determination date. If the average closing level of the Relevant Underlying over the averaging dates is above the closing level on strike date, then you will receive a positive return on the Notes (assuming a net purchase price of par) with such return being adjusted upwards or downward by the FX Ratio. See also Element C.18. C.16 Maturity Date of the Notes: C.17 Settlement procedure of the derivative securities: C.18 How the return on the derivative securities takes place: 7 January 2019 or, if later, the fifth Business Day following the determination date (scheduled for 17 December 2018 but subject to postponement in case the relevant exchanges for the component securities of the Relevant Underlying are not open or are disrupted). Notes issued will be cash-settled. On the relevant date for redemption of the Notes, the Issuer shall pay the relevant redemption amount per calculation amount (such calculation amount being SEK 10,000) to the Noteholders through the relevant clearing systems, and such amounts shall be credited to the relevant Noteholders' respective accounts held either with such clearing systems or with a financial intermediary that is a member of such clearing systems. Return on the derivative securities on the Maturity Date Unless subject to unscheduled early redemption, the amount in SEK payable on the maturity date for each Note (representing a principal amount equal to SEK 10,000) will be determined in accordance with paragraphs (i), (ii) or (iii) as applicable: (i) if on the determination date, the closing level of the Relevant Underlying is greater than or equal to the closing level of the Relevant Underlying on the strike date: an amount equal to the product of (i) the calculation amount (being SEK 10,000), multiplied by (ii) the sum of (a) one plus (b) the product of (I) the Participation Call multiplied by (II) the Call Performance and further multiplied by (III) the FX Ratio (or if the Call Performance is a negative amount, the value for paragraph (b) shall be deemed to be zero): For such purpose: "Call Performance" means the quotient of (i) the difference between (a) the arithmetic average of the closing levels of the Relevant Underlying on the Averaging Dates (as set out below) minus (b) the closing level of the Relevant Underlying on the strike date divided by (ii) the closing level of the Relevant Underlying on the strike date. "FX Ratio" means FX Final divided by FX Initial where "FX 6

14 Summary (ii) (iii) Final" and "FX Initial" mean the USD/SEK rate of exchange, being the number of SEK per USD measured by comparing EUR/SEK and EUR/USD rates of exchange on, respectively, the first business day following the determination date and the first business day prior to the strike date. "Participation Call" means an amount determined by the Issuer on or around the trade date (being 13 December 2013) based on prevailing market conditions and which will be notified by the Issuer on or around such date on the website and which as of the date of this Prospectus is indicatively set at 113 per cent., but which may be a lesser or greater percentage provided that it will not be less than 93 per cent. The "Averaging Dates" are as follows (each subject to postponement in case the relevant exchanges for the relevant component securities of the Relevant Underlying are not scheduled to be open or are disrupted): Averaging Date Table T Averaging Date 1 19 December March June September December March June September December 2018 if on the determination date, the closing level of the Relevant Underlying is lower than the closing level of the Relevant Underlying on the strike date but above or equal to the barrier level: an amount equal to the calculation amount (being SEK 10,000); OR if on the determination date, the closing level of the Relevant Underlying is lower than the barrier level: an amount equal to the product of (i) the calculation amount multiplied by (ii) the quotient of (a) the closing level of the Relevant Underlying on the determination date divided by (b) the closing level of the Relevant Underlying on the strike date. In this case, you will lose some and up to all of your investment. Return on the derivative securities in the case of unscheduled early redemption: for tax reasons or upon force majeure or illegality: The Notes may be terminated prior to the maturity date at the Issuer's option for reasons of tax or upon force majeure or illegality, under the terms and conditions of the Notes. In such case, the amount payable on early redemption shall be, for each Note (representing a principal amount equal to the Calculation Amount), an amount equal to the fair market value of such Note, on such day as is selected by the Determination Agent in its sole and absolute discretion (provided that such day is not more than 15 days before the date fixed for redemption of the Note), less the proportion attributable to that Note of the reasonable cost to the 7

15 Summary Issuer and/or any Affiliate of, or the loss realised by the Issuer and/or any Affiliate on, unwinding any related hedging arrangements, all as calculated by the Determination Agent in its sole and absolute discretion. In such case, if you have purchased the Notes at the Issue Price, the early redemption amount may be less than your initial investment and therefore you may lose some or all of your investment; and C.19 Final reference price of the underlying: C.20 Type of underlying and where information on the underlying can be found: upon an event of default: The Notes may be redeemed prior to the maturity date upon an Event of Default. In such case, the amount payable on early redemption shall be, for each Note (representing a principal amount equal to the Calculation Amount), an amount determined by the determination agent, acting in good faith and in a commercially reasonable manner, as at such day as is selected by the determination agent in its sole and absolute discretion (provided that such day is not more than 15 days before the date fixed for redemption of the Notes), to be the amount that a Qualified Financial Institution would charge either to assume all of the Issuer's payment and other obligations with respect to the Notes as if no such Event of Default had occurred or to undertake obligations that would have the effect of preserving the economic equivalent of any payment by the Issuer to the Noteholder with respect to the Notes. In such case, if you have purchased the Notes at the Issue Price, the early redemption amount may be less than your initial investment and therefore you may lose some or all of your investment. The closing level of the Relevant Underlying will be determined on the determination date (17 December 2018). For the purposes of calculating the final redemption amount (where the closing level on the determination date is equal to or above the closing level on the strike date) payable at maturity, the closing level of the Relevant Underlying on each Averaging Date, including the determination date, (as well as fluctuations in foreign exchange rates between EUR/SEK and EUR/USD) are taken into account. The Notes are Equity-Linked Redemption Notes. "Relevant Underlying" means the Morgan Stanley SmartInvest Equity Index (Price Return) (Bloomberg: MSIQSMDP <Index>). Information about the past and the future performance of the Relevant Underlying and its volatility can be obtained from Bloomberg page MSIQSMDP <Index>. Section D Risks D.2 Key Risks Specific to the Issuer and the Guarantor: The following key risks affect Morgan Stanley and, since Morgan Stanley is the ultimate holding company of MSBV, also impact MSBV:: Liquidity and funding risk: Liquidity is essential to Morgan Stanley's businesses and Morgan Stanley relies on external sources to finance a significant portion of its operations. Morgan Stanley's borrowing costs and access to the debt capital markets depend significantly on its credit ratings, which may change. Further, Morgan Stanley is a holding company and depends on payments from its subsidiaries. As a result, there is a risk that Morgan Stanley will be unable to finance its operations due to a loss of access to the capital markets or difficulty in liquidating its assets. Further, Morgan Stanley's liquidity and financial condition have in the past been, and in the future could be, adversely affected by U.S. and international 8

16 Summary markets and economic conditions. Market risk: Morgan Stanley's results of operations may be materially affected by market fluctuations and by global and economic conditions and other factors. Morgan Stanley may experience declines in value of its financial instruments and other losses related to volatile and illiquid market conditions. Holding large and concentrated positions may expose Morgan Stanley to losses. In particular, Morgan Stanley has incurred, and may continue to incur, significant losses in real estate. These factors may result in losses for a position or portfolio held by Morgan Stanley or its consolidated subsidiaries. Credit Risk: Morgan Stanley is exposed to the risk that third parties that are indebted to it will not perform their obligations, as well as that a default by another large financial institution could adversely affect financial markets generally. Such factors give rise to a risk that risk of loss arising when a borrower, counterparty or issuer does not meet its financial obligations. Operational Risk: Morgan Stanley is subject to the risk of financial or other loss, or potential damage to a firm's reputation, resulting from inadequate or failed internal processes, people, resources and systems or from external events (e.g. fraud, legal and compliance risks or damage to physical assets). Morgan Stanley may incur operational risk across the full scope of its business activities, including revenue-generating activities (e.g. sales and trading) and control groups (e.g. information technology and trade processing). Legal, Regulatory and Compliance Risk: Morgan Stanley is subject to the risk of exposure to fines, penalties, judgments, damages and/or settlements in connection with regulatory or legal actions as a result of non-compliance with applicable legal or regulatory requirements and standards or litigation. In addition, Morgan Stanley is subject to the risk that a counterparty's performance obligations will be unenforceable. Further, in today's environment of rapid and possibly transformational regulatory change, Morgan Stanley also views regulatory change as a risk to which it is subject. Risk Management: Morgan Stanley's hedging strategies and other risk management techniques may not be fully effective in mitigating its risk exposure in all market environments or against all types of risk. Competitive Environment Risk: Morgan Stanley faces strong competition from other financial services firms, which could lead to pricing pressures that could materially adversely affect its revenue and profitability. Further automated trading markets may adversely affect Morgan Stanley's business (for example by putting downward pressure on trading commissions or comparable fees). Finally, Morgan Stanley's ability to retain and attract qualified employees is critical to the success of its business and the failure to do so may materially adversely affect its performance. International Risk: Morgan Stanley is subject to numerous political, economic, legal, operational, franchise and other risks as a result of its international operations (including risks of possible nationalization, expropriation, price, capital or exchange controls, increased taxes and levies and other restrictive governmental actions, as well as the outbreak of hostilities or political and governmental instability) which could adversely impact its businesses in many ways. Acquisition and Joint Venture Risk: in relation to past and future acquisitions, Morgan Stanley may be unable to fully capture the expected value from acquisitions, joint ventures, minority stakes and strategic 9

17 Summary alliances. All material assets of MSBV are obligations of one or more companies in the Morgan Stanley group and MSBV's ability to perform its obligations is dependent upon such companies fulfilling their obligations to MSBV. Should such companies prospects be impaired, holders of securities issued by MSBV may also be exposed to a risk of loss. D.6 Key Risks Specific to the Notes, including a risk warning to the effect that investors may lose some or all of their investment: WARNING: INVESTORS IN NOTES MAY LOSE THE VALUE OF THEIR ENTIRE INVESTMENT, OR PART OF IT. The Notes are subject to the following risks: THE NOTES ARE NOT BANK DEPOSITS AND ARE NOT INSURED BY THE U.S. FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY, NOR ARE THEY OBLIGATIONS OF, OR GUARANTEED BY, A BANK. AN INVESTMENT IN THE NOTES BEARS THE RISK THAT THE ISSUER IS NOT ABLE TO FULFIL ITS PAYMENT OBLIGATIONS UNDER THE NOTES. IN SUCH CASE INVESTORS MAY LOSE SOME OR ALL OF THEIR MONEY. IN ADDITION, INVESTORS MAY LOSE SOME AND UP TO ALL OF THEIR MONEY IN THE EVENT THAT THE NOTES ARE SUBJECT TO AN UNSCHEDULED EARLY REDEMPTION (FOR REASONS OF TAX, FORCE MAJEURE OR ILLEGALITY) OR IF AN INVESTOR SELLS ITS NOTES PRIOR TO MATURITY AT A LOSS. The performance of the Relevant Underlying on the determination date relatively to such performance on the strike date will determine the return on the Notes on Maturity Date, and a lower performance on the determination date may result in investors losing some or all of their money. If the performance of the Relevant Underlying is higher on the determination date than the strike date, the return on the Notes will still depend on the performance of the Relevant Underlying on each Averaging Date and if the average of such performances is not higher than the closing level of the Relevant Underlying on the strike date, then the return on the Notes may be equal to zero. Furthermore, in addition to the performance of the Relevant Underlying, the return on the Notes will be affected by fluctuations in currency exchange rates of EUR/SEK and EUR/USD. The Participation Call will not be set by the Issuer until on or around the trade date (13 December 2013, subject to adjustment). There is a risk that the final amount set by the Issuer will be less than the indicative amount of 113 per cent., though the final amount will not be less than 93 per cent. Investors must base their investment decision on the indicative amount (and the minimum amount) so provided, and will not have a right of withdrawal from their purchase obligation when the amount is finally set and no supplement will be published in relation to such final setting. The final redemption amount payable under the Notes may be determined based on the arithmetic mean of values determined as of a series of Averaging Dates. This will limit the extent to which a sudden increase or decrease in value and/or performance of the Relevant Underlying on a single date affects (whether positively or adversely) 10

18 Summary the determination of such final redemption amount. The performance of an index depends upon macroeconomic factors relating to the shares or other components comprising such index, and in the case of share components company-specific factors. Noteholders are exposed to the risk that returns on the Notes do not reflect a direct investment in underlying shares or other assets comprising an index. If the index rules provide that dividends on its components do not increase the index level Noteholders will not participate in such dividends, even if the index rules provide that dividends are reinvested (thereby increasing the index level), in some cases the dividends may not be fully reinvested in an index. A change in the composition or discontinuance of an index may affect the index level and adversely affect the market value of the Notes. Secondary trading of the Notes may be limited. Further, if the Notes are traded via one or more electronic trading systems and these systems become partially or completely unavailable, this would affect the investor's ability to trade the Notes. Potential conflicts of interest may exist between the investor and the determination agent, who, under the terms of the Notes, may make such adjustments as it considers appropriate as a consequence of certain events affecting the Relevant Underlying, and in doing so, is entitled to exercise substantial discretion. U.S. federal tax rules commonly referred to as "FATCA" generally impose a withholding tax of 30% on certain payments made after 30 June 2014 to certain foreign entities (including financial intermediaries) with respect to certain "obligations" issued after 30 June 2014, unless various U.S. information reporting and due diligence requirements have been satisfied. U.S. federal tax law may impose a withholding tax of up to 30% on payments or deemed payments made to non-u.s. persons that are contingent upon or determined by reference to U.S. source dividends. Notes may be redeemed early if the Issuer is obliged to increase the amounts payable in respect of any Notes due to any withholding or deduction for or on account of, any present or future taxes or such levies. If an event of default occurs in respect of the Issuer, investor would have an unsecured claim against the Issuer for the amount due on the early redemption of the Notes. The market price of Notes may be very volatile. Further, investors in Notes may receive no interest and payment or payment of principal or interest, if applicable, may occur at a different time or in a different currency than expected. The Relevant Underlying may be subject to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices. The timing of changes in the Relevant Underlying may affect the actual yield to investors, even if the average level is consistent with their expectations. It is impossible to predict how the level of the Relevant Underlying will vary over time. The historical performance value (if any) of the Relevant Underlying does not indicate the future performance of the 11